Hand the keys in and walk away? No chance!

 From today´s El Pais:

http://www.elpais.com/articulo/english/Congress/closes/the/door/on/option/of/walkaway/mortgages/elpepueng/20110801elpeng_4/Ten

Dear All,

not as bad as the thread title suggests but we still need Maria's input.

Regards

Norman

Very interesting article.  I agree, hearing Maria's point of view on this would be interesting. This is going to make things even harder for those suffering genuine hardship who face reposession.

Can anyone clarify a point for me ? When a bank sells a property at auction they are obliged to give the mortgagee 60% of the valuation if there are no bidders. Is this 60% of the original valuation or 60% a new valuation undertaken when the house is put into auction. An answer to this would be appreciated.

The article states the "originally assessed value". It would be even more catastrophic if you´d paid 200K for a property, then found it revalued at 100K and only had 60K knocked off your debt. But perhaps someone could clarify.

But at the end of the day, what is to stop anyone walking away if they plan to return to the UK? Nothing!

AMATISTA

Except that the entities, which granted the mortgages can, and do, rightly follow borrowers back to where they have assets and claim in the local courts against those assets.

Whilst it is unfortunate that property markets have fallen that is no reason why borrowers should default on loans.  It is also not the fault of the lender that the market has fallen nor that the lender cannot meet the contact which they freely entered into.

I am sure the people who have money invested in banks etc would feel defrauded by people walking away from their legal commitments.  In the end it is the investors who would loose the funds.

This message was last edited by johnzx on 02/08/2011.

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Hi,

I don´t condone people walking away from their responsibilities, but I know several who have, and if they don´t own property in the UK and are going back to rent, I would think it is unlikely the Spanish authorities will catch up with them. Also, as it would appear the bank valuers over valued many properties (including mine), so many of us thought we had a ´good deal´ at the time of purchase, I certainly don´t feel sorry for the banks.

Amatista

AMATISTA.

There have been cases of Spanish banks pursuing mortgagees to UK and successfully taking action there against their UK assets.

There may not have been many such cases yet! But if the number of people trying to defraud the banks increases no doubt the number of actions in UK will increase too.

If as you say, the people who walk away don't have assets, maybe the banks will start looking at their applications to see if they lied in order to obtain the loan. If so I guess, the number of criminal actions for fraud will increase too.

This message was last edited by johnzx on 02/08/2011.

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I doubt it John, but your views make interesting reading. I am sure they will be far too busy bringing criminal actions for fraud against their own countrymen, than to bother pursuing UK citizens who allow the banks to repossess their properties because they can no longer afford their mortgage (eventhough they don´t hang around to pay any shortfall). I know of one woman who handed her keys back and was told she would not be liable for any short fall when the property was sold as it was over-valued by the same bank in the first place (a rare admission indeed).

Amatista.  

                              With respect the quote you make about the person WHO WITH THE AGREEMENT OF THE BANK handed the keys back, does not have any bearing on anyone who does not have such an agreement.

As for too busy to take legal action.  With the banks experiencing bigger and bigger holes in their finances they will find the time.  I for one would not take the risk as if action is taken, not only the amount owing will be claimed, but the bank's costs and the legal expense too (and we know how much lawyers charge ! )

I live near a town hall car pound.  Before the crisis I was hardly aware of cars being deliever there by the tow away trucks,  now there is a constant steady stream all day and evening,  at around 100 euros oper car.  The town halls too need money, so they are finding ways of doing so.

Yes I see your point

I think we need to acknowledge that there is a difference between those who walk away from their property because it hasn't worked as an investment and those facing genuine hardship through redundancy  etc.

I agree that the banks need to take responsibility for their greed, they readily overvalued properties and gave mortgages over 100% of the property value and should shoulder someof the blame for the property crisis.

Dear All,

Professional crime seems to me to be the major crime in the world today and it is perpetuated by "professionals" of whatever field, medical, business, engineering, surveying, finance, law etc.

It further seems to me that the only fraud effected in these cases is that of the banks who have been rightly accused of deliberately overvaluing properties and giving morgages to anyone with a pulse, make no mistake about it these mortgages and the overvalued properties were sold much like the american market.

The market was rigged - nothing was genuine except the unfortunate citizens caught up with it.

The citizen was not the criminal here and your sympathies are misplaced.

Regards

Norman

I agree Norman, and with the track record of banks, councils, mayors etc., in this part of the world, it is little wonder everyone has been misled

Most of the buyers who took inflated mortgages knew what they were doing.

If they could not afford the repayments (in good times and in bad) that was their problem, they should not have taken the loans. Most hoped that the bubble would continue to grow and that they would make money.

It maybe that the banks were greedy but so too were the buyers.

It appears that many of the buyers now want to walk away because their 'investment' is not worth what they owe on it, not that they cannot make the repayments. Tough, that's life.

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I disagree John, I would say the majority are walking away as they cannot pay the loans back, mainly due to the recession and subsequent unemployment and redundancy.

I don´t think the majority of these people take this step lightly as they have already ploughed thousands of pounds into their properties but find themselves in an impossible situation. I, for one would move back to the UK tomorrow if I could sell my apartment, but it is looking unlikely at the moment. I have been here 16 years, bought my apartment 6 years ago and have come to the conclusion, it´s a great place to spend a holiday or retire to, but try to earn an honest living (or find a job with a contract in Spain, which is the norm in most other European countries) is nigh on impossible.

OK even accepting what you say. If you lend me £100, would you be happy if I tell you next week that I lost my job so I will not pay you back? (I walk away from the commitment).

he fact that buyers will loose, that was chance they took.

About twenty years ago my son in UK had to put £15,000 on top of what he sold a flat for, to pay off the mortgage. That in effect meant the property had been over valued by the building society, but when he bought it, it was a fair valuation.

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Dear All,

were I to lend John money, which through no fault of his own, he could not pay back, that would be my problem and risk, a simple commercial risk allowed for in the interest I was charging him.

I would not seek to break his legs so that he could never work again and reduce the possibility of repayment, nor would I take the roof from over he and his family's head, or indeed do anything to make his circumstances worse. I would do all to assist him.

I would also expect the same treatment from him in the reverse situation, indeed I regard that as normal behaviour.

I am convinced that the boom and bust cycle is greatly accentuated by unecessary repossesions and subsequent ruination of ordinary people's lives, totally unecessary misery in life.

Indeed if people are abused in this way because they are not too big to be allowed to fail it is a failure of society in general.

I cannot see that such cruelty can be in accordance with human rights.

Ruin me and cause my children to starve is not what I would vote for or expect in a civilised society.

Regards

Norman

I would not agree that all banks were greedy and lent out more than they should ours I remember in 2005 was quite strict and would only lend 75% of value it was a relitavely small local bank and we had a lot of checking done within the UK to support the loan.

The larger banks were much more genorous and people have said this but the terms were extortianate I found

A comparison would be in our situation the older style Uk building societys and a traditional bank.

Rod

Rod, even a 75% loan shortly before the crisis would now mean negative equity.

Say one bought then for 200,000 with a 150,000 loan. If one wanted to sell now, they probably could not find a buyer at anywhere near 150,000. If the bank repossessed it then why should the bank loose and the buyer just walk away? Some people here think that they should.

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